[abb]

Social Security is already “means tested.”

http://www.ssa.gov/planners/taxes.htm

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.

If you: file a federal tax return as an “individual” and your combined income* is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.

more than $34,000, up to 85 percent of your benefits may be taxable.

file a joint return, and you and your spouse have a combined income* that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits

more than $44,000, up to 85 percent of your benefits may be taxable.

are married and file a separate tax return, you probably will pay taxes on your benefits.

[Lou L]

I'm not quite near SS age, so I've never really done the research on what the tax rates are. Thank you for your totally depressing information!

I won't be anywhere near the three million cap, but I'm doing reasonably well. Enough so that by using the scenarios you provided, I'll likely get very little from my SS income (should it still be there when I retire.)

[KarlInOhio]

Social Security is already “means tested.”

And that's on top of the fact that Social Security payments are already disproportional to the amount paid in. If you compare two people, one who earns income at the SS cap and pays the absolute maximum SS tax throughout his career and one who earns and pays half as much, the higher earner would make 50% more in SS payments as opposed to 100% more if he was paid proportionally to his taxes paid.

Would anyone accept a savings account or investment paid non-proportionally like that? That disproportionality is either an undeserved tax on the high earner, or an unearned benefit for the lower earner.

And those are just two points. The disproportionality becomes worse as you go further down the scale.

I think it would be interesting to see at what income the benefit vs. tax curve matches the total payment ratio which would define the point where the retiree is paid his share, no more and no less.

[Cheerio]

This usually happens only if you have other substantial income

I take exception to the word substantial. I pay every year on my SS benefits and my interest/dividend is hardly what I would call "SUBSTANTIAL". I have been having problems paying for my medical and drug insurance, not to mention the drugs.

[Grampa Dave]

In reality those of us with income over the limits you cite get multiple hammering.

My company gave me a good early retirement package @ the age of 56.

The catch was when you turned 62, they deducted that from your monthly pension.

I had good consulting gig and made any where from $500/1000 per week.

When I went on social security at age 62, our CPA told me to quit the consulting gig and work on preserving our IRA s.

My wife complained, and our CPA told her to get Homer bucket and once a month fill the bucket with 10 to 20 dollar bills and sit in the back of my pickup and toss the money out due to the taxes.

So I quit my consulting and the SS fund lost my double contributions as an independent contractor.